If - in addition to what was described - part of the deal is that Apple would only make the deal if TSMC would not add any more capacity for 2 years NO MATTER WHAT - that is blatantly anti-competitive and monopolistic.
If no one else is willing to pay for TSMC to build another facility to produce more chips - then that's a free market. Apple was the highest bidder and won.
The essential facilities doctrine might apply (the question isn't whether competitors are literally forbidden from the latest chips, it's whether they're "practically or reasonably" unable to access the latest chips, and all evidence suggests that's currently the case). Possibly it's the competitors own fault for refusing to pay the entirely reasonable price TSMC is insisting on, and perhaps Apple's contract with TSMC actually has carefully written clauses to ensure others could practically gain access without having to spend enormous amounts of money, but which nobody has been willing to use for their own reasons, but it certainly seems possible that the contracts effectively ensure Apple have sole access to the latest hardware, which would line up neatly with the apparent scenario we're in - that Apple currently has sole access to the latest hardware.
That's not to say it's a slam dunk case either. I wouldn't care to guess either way.
Shutting out all competitors from new technology for years by outspending them (arguably from profits largely made via other monopolistic like behaviors) could qualify for many.
I'll never understand the endless parade of apple goons who rush to defend them at every turn. Use some critical thought instead of treating it like sports
I'm describing a company that is able to pay far higher than competitors due to anticompetitive practices which drive their margins far above what would be realized in a truly competitive environment.
I'd gladly like to see the alternative timeline where Microsoft charged 30% for all software on windows and where you and others shamed them for it. Because I know for a fact all of those defending Apple here would have at the time
And if you look at their revenue breakdown, it’s clear that most of it comes from hardware.
When an ecosystem becomes large enough, societally impactful enough, and is controlled exclusively by one entity, that qualifies as a monopoly within that ecosystem.
You remove any capacity for competition to drive down margins. Apple can ban Spotify tomorrow to promote apple music on their devices, for example. Not anti-competitive in your mind?
You have two gated monopolistic ecosystems, choose the one you want to be gouged by. In a competitive environment, margins get compressed close to cost to deliver. If a company can achieve huge margins on items that could otherwise be much cheaper to deliver in a competitive environment, that qualifies as anti competitive.
How much does it cost the supplier to host apps via CDN? Or to process a single payment? Apple can take as much margin as they want on these because nobody else is allowed to provide those services within their ecosystem
The law will adapt to this, it's quite obvious to those that are unbiased.
The amount of REVENUE Apple makes from iTunes is likely less than $5Bn per quarter.
Apple is not using their iTunes monopoly to buy chips.
They're using their insane amount of phone sales (at absurd profit margins) to buy chips.
Again, I hate Apple as much as anyone. Anyone who thinks Apple is a monopoly in phones is a moron. They don't even own 30% of the smartphone market...
I agree Apple is anti-competitive within the ecosystem of the iPhone. That's not going to change their ability to buy all of TSMC's chips.
Is there some number of gated ecosystems that we get gouged by that would be considered acceptable and non-monopolistic? Three, ten?
When a platform reaches a sufficient size (subjective), it must be opened to competition for services provided within that platform.
We're talking about the base operating system for global computing here, not a car's dashboard system
This sounds similar to how Torvalds has a monopoly on services within mainline Linux?
You can poll your friends, colleagues, and relatives - how many people use iPhone vs something else. If % is more than 50%, then apple is monopoly effectively
same with mobile tablet market, just make a table of how many ipads vs alternatives.
It only makes sense to do this on the level of a governing body, because the term 'monopoly' is defined by governing bodies and the remedies against it are enforced by the same.
You can cherry-pick / gerrymander any group you want to make it look like Apple has a monopoly by the numbers, but in order to make it stick you'd need to demonstrate that Apple fixes prices (they don't, their phones cost ~2x or more what competitors' phones cost) or that they're somehow excluding other competitors from access to the phone market (they're not).
However, iPhone is not a commodity, it comes bundled with an OS and plethora of apps and services, the whole ecosystem.
per this report ( https://www.imore.com/apple-takes-75-smartphone-profits-desp... ) it says apple is taking over 75% of profit pool of the market, despite selling only 13% in units.
If we identify monopolists using bottom-line approach, then Apple will be a clear monopolist. As would be Facebook and Google. as they should be, if lawmakers truly cared about public good
Per the parent, the challenge is to convince governments to take your proposed approach. Repeating the argument to try to convince a HN crowd is not just non-productive, but counter-productive if it doesn't move toward this goal.
Taking away property and/or converting investments into a utility when a business becomes too successful results in a lot of nasty byproducts and most governing bodies will shy away from this.
Instead, you likely see the issue completely side-stepped. Nobody truly cares about labelling Apple a monopoly or declaring iOS to be a somehow accepted as a market onto itself - they want a change in behavior.
The challenge is how to side-step this when per the letter of the law, they have literally done nothing wrong. For instance, the EU will likely get a lot of pressure due to new regulations being solely against US-headquartered countries for the primary benefit of companies in the EU.
Actually, if this were to happen back in the days, we would have everyone on Linux Desktop already...
>I'll never understand the endless parade of apple goons who rush to defend them at every turn.
May be because people are not defending Apple but actually giving the correct account of the story?
I dislike modern Apple, or Tim Cook's Apple. But doesn't mean I would agree what they are doing ( in the context of TSMC ) are monopolistic. Without Apple, there would be no N3 by 2023. It is as simple as that. Apple in this case is not a customer, but more like a partner who are willing to invest ( and take the associated risk ) and spend to get and push for the latest technology.
Backing up though I think it's interesting that Apple has so much money that they can afford to buy up leading nodes for years. Why do they have that much money? I think it's obviously because of anti competitive behavior elsewhere such as their App Store which basically gives them a money printer.
The free market sucks. People need to stop valorizing it.
In a purely free market, monopolies can form and exist in perpetuity
To have a truly free market it should be accounting for this edge case - that is once a company grows beyond certain size it should by law be split.
There should be other provisions - for instance if the big corporation causes a legal trouble, they should match the legal team of they claimant - for instance, if someone is suing Apple because of an issue with their hardware and Apple sets aside £100m legal budget - by law they should be required to set £100m for the claimant, so there is level playing field. That of course only if the judge decides for the case to go on.
It would certainly have the potential to make the market work better and improve competition, but that's not what a free market is.
Corporations also can't do what they want - for instance they cannot commit fraud, evade taxes, sell dangerous products and so on.
You have something like that in sports, when in order for participants to compete freely, they are being tested for illegal drugs, so that no one has a unfair competitive advantage.
Free != do what you want.
> an economic system in which prices are determined by unrestricted competition between privately owned businesses.
"Unrestricted competition", to me, clearly says that businesses should be able to compete without such restrictions as being split up by the government if they become too big.
Or this definition from investopedia (the first actual result on Google):
> The free market is an economic system based on supply and demand with little or no government control.
The government splitting up businesses is certainly a form of government control.
However, Wikipedia's first paragraph is:
> In economics, a free market is a system in which the prices for goods and services are self-regulated by buyers and sellers negotiating in an open market without market coercions. In a free market, the laws and forces of supply and demand are free from any intervention by a government or other authority other than those interventions which are made to prohibit market coercions. Examples of such prohibited market coercions include: economic privilege, monopolies, and artificial scarcities.
Apparently, the government imposing control and restricting competition is part of Wikipedia's definition of a "free market", so extremely harsh anti-monopoly and laws against anti-competitive behavior fits perfectly well in Wikipedia's definition, but makes the market less free according to the definitions I've been following.
The important part is, I agree that a lot of government intervention is required to make markets function efficiently. I just personally wouldn't call that a "free market", rather a well-regulated market.
Also, Apple didn't make intel fumble their 10 nm process or Qualcomm to miss aarch64. Result of anticompetitive practices of intel and Qualcomm made them lazy and that resulted in this, not Apple buying TSMC capacity.
How is that not free market?
As a consumer, I can now go out and buy a machine with Apple silicone, Intel, AMD.
If anything, we're finally seeing some improvements after years of chip stagnation.
I'm not sure if node exclusivity was why Apple has the first true wireless earbuds, there was one competitor first with some giant ones so I suspect so, but lots of competitors followed fast (other foundry's nodes were more competitive then). Anyone know the history on that and what nm chips were used by them and earliest competitors?
Apple was just smarter and convince consumers to buy its products at a premium - just like with iPhones.
Consumers couldn't buy products with a pocketable harddrive: Apple had exclusivity agreements with all manufacturers of them to completely monopolize their use for music players.
Also remember that the iPod wasn’t an immediate hit and it only sold 1 million in total in its first two years. It wasn’t until two years later when it was made available on Windows.
Apple did the same with Flash storage before the iPod Nano came out. Any of its larger competitors at the time could have had the vision to see that flash based players were the future and ensure they had the supply.
There are multiple fabricators (supply) and a small pool of chip manufacturers (demand).
As a chip manufacturer, I cannot go out and buy competitive silicon. I can't even get last-gen silicon. The best you can get is an improved 7nm node from Samsung, but nobody wants to run their CPU on the blood and guts of Exynos chips. So, by definition, I'd say that Apple has monopolized the cutting-edge lithography business through leveraging a partner.
It isn't like Samsung and AMD can't afford to jump on new nodes, they just won't be able to raise their prices enough for it to make sense to them.
Apple pays more hence they get the product
If someone else wants to pay more, they can get the product too
There are other foundries too, they could get their phone chip done with Samsung on a similar technology
What is true is that outside of TSCM and Samsung, you don’t have options for high end products
The fact they got more money than competitors and leverage that to get exclusive control doesn't matter much. Textbook definition of a monopoly. On legal side, IANAL, no idea if this could be illegal somewhere.
They will just get the first chips — maybe for the first year of production, idk
Whatever you want to call it, it's pretty anticompetitive. Seeing them do the same thing for 3nm doesn't inspire confidence that they're going to do the right thing this time around.
Except for the first year where they take a headstart where nobody else can either have matching chips or figure out what issues come out of this process, making them get an even bigger advantage as they have stabilized their process on year 2 when everyone is barely building up.
Don't be a clown. You know fully well what Apple is doing.
If other fabs were available, apple's ability to pay up would not be leading to accusations of anti-competitive behaviour.
If I ignore reality and make up non-existent fabs, the extremely monopolistic, anti-competitive behaviour is not a problem!
>they are paying what they can afford.
The problem is not paying what they can afford, it's paying that in addition to forbidding TSMC from increasing their capacity on that node while the contract is ongoing. It's both paying what they can afford, and paying so that others can't afford it.
If some other company is willing (or really: able) to make a competing offer, I’m not aware of TSMC not being interested in that. It just happens that the number of companies with the margins to spend what probably amounts to the GDP of a small nation is approximately zero (or one if you count Apple)
Except they didn't have exclusive access? Huawei also bought 5nm. Intel contracted 3nm along with apple before backing out.
Is there any proof that this is actually true? TSMC is currently building few new factories, I suppose they will produce 3nm chip in them.
I am sorry but that is simply not true. Sigh.
Except that Apple don’t supply or trade in chips. If they were buying up chips and hoarding them it might be considered a monopoly.
The seller of Top Quality Material are in no position to sell their A grade material to all buyers.
I think the issue is that the investment costs are so high that this ability is limited to a very small group of companies, as is the required knowledge.
I don't really know where I stand on this myself; in principle I agree with your point of view, but I also think it's a little bit too simplistic.
But this is also a free market.
Apple is both willing to pay more and has the needed scale to buy up all capacity. If someone else wanted to both pay more and buy up all capacity - they have the ability to do so.